Big is not always better as ‘serious breaches’ mean £10m fines for ‘big four’ accounting firms

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Big is not always better as ‘serious breaches’ mean £10m fines for ‘big four’ accounting firms

Accountancy-big-four

Big is not always better.

OK, we don’t claim to be the worlds leading accountancy firm. But we do pride ourselves on the integrity of our accounting practices.

Unfortunately that doesn’t seem to be the case for the world’s ‘Big Four’ accounting firms who look set to face large fines of £10m or more for serious rule breaches in June. This fine would be double the record penalty dished out to date.

The Financial Reporting Council (FRC) said that it accepts the findings of a study by judge Christopher Clarke in November that suggested much bigger fines for serious misdeeds by the world’s biggest accountants in an attempt to bring them into line.

The FRC is keen to demonstrate credibility following criticism by MPs who stated they were too slow to take on the big accountants that were involved in scandal, with the first course of action by the FRC to be bigger fines.

Judge Clarke stated a suggested increase in fines to £10m or more for seriously poor audit work from a big four accounting firms – PwC, KPMG, EY and Deloitte. The ‘big four’ check and take care of the books for the majority of leading blue-chip companies.

The record amount agreed by a tribunal so far is £5.1m for PwC over its audit of RSM Tenon. The FRC’s disciplinary process includes a case at tribunal against auditor or individual accountant before the tribunal is asked to set the fine (at a specific level).

As part of the incentive for compliance from the big firms, the FRC has indicated fines will be discounted based on the level of cooperation during an investigation. However a £10m fine is still small compared with penalties imposed by the Financial Conduct Authority for breaches of financial rules.

As a word of warning, the ICAEW accounting industry body has warned that imposing big fines could ultimately harm the sector by prompting some firms to quit auditing altogether.

As a small (but perfectly formed) practice, Marden & Co has both the expertise and professional will to ensure our clients not only receive the best possible service and advice, but also that they are protected from exposure or scandal through wrongdoing, however big or small your business.

So if you’re looking for an accountancy firm you can trust, who cut the jargon and offer you the assurance of peace of mind, then get in touch with Marden & Co today – you can give us a call on 01737 851 761 for a no-obligation chat or drop us an email on info@mardenandco.co.uk